This is a digitized version of an article from The Times’s print archive, before the start of online publication in 1996.
To preserve these articles as they originally appeared, The Times does not alter, edit or update them.

Occasionally the digitization process introduces transcription errors or other problems.
Please send reports of such problems to archive_feedback@nytimes.com.

IT IS THE SORT OF FABLED BRAND name that marketers usually only dream about. If you were in the copier business, you would wish your name were Xerox. If tissues were your product, it would be nice to be named Kleenex. But if you were going to make your fortune in food processors, you couldn't do better than to possess the name Cuisinart.

That, at least, was what a group of investors thought when they took on a mountainous debt and bought Cuisinarts Inc. early in 1988 from Carl Sontheimer, the inspired founder of the company and an almost deific figure in the kitchenware industry. They acquired not only the Rolls-Royce of food processors, but also a venerated name with such cachet that it could probably be stamped on alarm clocks or cat beds and produce a bonanza.

Two years later, the bonanza has proved elusive and Cuisinarts lies enfeebled. The group of investors who bought it, led by Robert Fomon, the controversial former head of E. F. Hutton, and George Barnes, a housewares veteran with a checkered history, are gone. Meanwhile, Cuisinarts collapsed into bankruptcy before the major creditor sold it at the end of December at a significantly marked-down price to the Conair Corporation, the hair-dryer people. Resurrecting Cuisinarts, though, may be a perilous mission.

How could such a conspicuous name become crippled so quickly? Like so many other fast-dollar artists of the 1980's, Fomon and Barnes rooted their dreams in borrowed money. Despite the wonder of the name, Cuisinarts was the wrong prospect at the wrong time to pile borrowings on. Starting out with a poor hand, the owners seemed to make matters worse through a procession of bad gambles.

CARL SONTHEIMER, A PORTLY, RUMPLED , retired physicist, grew up in France, where his father labored in the export division of an American company. A graduate of the Massachusetts Institute of Technology, he holds 40-odd patents, mostly for various electronic components. Ever since he was a child, however, cooking has been his private obsession. He would grow excited over a new goulash recipe the way that other youngsters would thrill over the latest muscle car. Those who know him describe him as stunningly intelligent, a perfectionist and stubborn to a fault.

Before Cuisinarts, Sontheimer formed an electronics business called CGS Laboratories. However, he got into a quarrel with a partner and unloaded his stake. In 1960, he established Anzac Electronics, which invented several electronic devices that found their way to the moon. But Sontheimer was frustrated being a minuscule player in the high-technology world and so, in 1967, sold Anzac to another electronics company.

Sontheimer, who declined to be interviewed for this article, was 53 and well enough fixed that he could have retired to limitless shuffleboard. But he couldn't imagine simply taking an early slide. Mulling over new roads to follow - maybe burglar alarms, he thought - he pondered his longstanding lust for cooking. He and his wife, Shirley, were visiting a French cookery show in 1971 in the hope of finding products fit for a franchise operation in the United States, when a bulbous, clumsy-looking device caught Sontheimer's eye: it was a food processor for restaurant chefs. Invented by Pierre Verdun in 1963, it was being manufactured by Verdun's company, Robot-Coupe, France's biggest maker of restaurant equipment. The machine didn't mop up or defrost the refrigerator, but it did just about anything - cut, slice, knead, chop, dice, grate, grind - to whatever food was shoved in it. It made redundant many of the numerous of gadgets crowding the counter top. As he studied the device, Sontheimer sensed that the mechanical marvel, if adapted for home use, could become an important product in the United States. In short order, he signed a distribition agreement to sell a modified version of the machine in America under the trade name Cuisinart. ''For Carl,'' an associate remembered, ''finding that machine was like finding the Holy Grail.''

RETURNING TO HIS HOME IN Greenwich, Conn., Sontheimer set up offices and began selling cookware. Meanwhile, for more than 18 months, with an absorption approaching obsession, he modified the blades and slicing and shredding disks and improved the safety of the processor. In January 1973, he unveiled it at the National Housewares Show in Chicago.

Shortly thereafter, a small band of salesmen began calling on upscale department and specialty stores to pitch the quirky-looking product. At first sight, it seemed too astonishing to believe. When the salesmen mentioned that the suggested retail price was $175, buyers would often flash ''Oh, brother!'' looks and laugh until their eyes welled with tears.

No matter the blandishments of the salesmen, sales amounted to only a few hundred thousand dollars until a glowing article appeared in 1975 in Gourmet magazine entitled ''The Phenomenal Food Processor.''

''When that article hit,'' recalled a former executive, ''mass hysteria struck.'' A host of other notable culinary experts - James Beard, Julia Child - raved about the device. Craig Claiborne wrote that it was perhaps the greatest food invention since toothpicks.

Suddenly Cuisinarts Inc. found itself with more business than it could handle. It paved the way for an entirely new kitchen appliance category, and before long people began offering classes teaching how to cook meals with the new gadget.

Within a few years, food processors arrived from Farberware, Waring, General Electric, Hamilton Beach and France's Moulinex. Some sold for half the price of a Cuisinart, but none matched its performance. For one thing, Sontheimer was fastidious about quality. In 1977, all the makers sold an estimated 500,000 units, with half of them believed to be Cuisinarts. Contradicting the normal rule of American enterprise, the most expensive product was the biggest seller.

Heady with success, Cuisinarts brought out more deluxe models. In 1979, when competing machines were selling for around $70, the company introduced a more powerful processor priced at $275. It was a time when fancy home cooking had become the rage, and the device sold briskly.

Sontheimer, however, (Continued on Page 66) became increasingly dismayed over quality control at Robot-Coupe, and so, like many leaders of American companies, he struck a deal with a Japanese maker. Before long, he was selling more Japanese than French models. Miffed executives at Robot-Coupe grumbled that he wasn't adequately promoting their machines and severed ties with him.

By 1981, Robot-Coupe was on the offensive. It had hired Alvin Finesman, who had been Cuisinarts' marketing head, to direct an American incursion of a machine carrying the Robot-Coupe name. Finesman, a spunky man with an Ichabod Crane body, was born to slap backs. His family owned a cigar and tobacco business, and, when he was 15, Finesman himself was hawking cigars to pharmacists in Ohio. He had grown disgruntled with his treatment at Cuisinarts. He maintains that Sontheimer promised him an equity stake in the company, but according to Finesman, when he approached Sontheimer and asked about the promise, Sontheimer's reply was, ''My wife won't let me.'' Finesman said, ''After 30 seconds, I quit.''. To get things rolling in his new job, Finesman developed an advertising campaign in which the copy read: ''Robot-Coupe. It's pronounced Robo-Coop. (It used to be pronounced Cuisinart.)''

Sontheimer didn't find the campaign amusing and filed a lawsuit charging deceptive advertising. Though Robot-Coupe was compelled to alter its slogan, the publicity engulfing the case was a stupendous boost to Robot-Coupe. But the battle of the cutters proved to be a dud. Robot-Coupe, Finesman allows, failed to deliver any more than a me-too product. Sales evaporated, Finesman left and the device today clings to a tiny share of the American market. It remains, however, France's leading food processor.

Cuisinarts itself received a black eye in the early 1980's, when a Connecticut grand jury and the Justice Department charged it with conspiring to fix prices by refusing to supply machines to stores that sold it below the suggested price. Sontheimer pleaded no contest and paid a fine of $250,000. Consumers, however, attacked with class-action suits. Sontheimer finally agreed to allow anyone who bought a Cuisinart between 1973 and 1981 to buy up to $200 worth of Cuisinart kitchenware at half price.

THE NEXT IMPORTANT moment in the history of the food processor occurred in 1985, in the form of a tiny device that was initially scorned as a ''gumball machine.''

The Sunbeam Company had undertaken a study of the market the previous year and was stunned to discover that half of all food processors were collecting dust in closets because their owners felt they were either too big, too complicated or too hard to clean - or all of those. Taking its cue from the study, Sunbeam built a little machine that it dubbed Oskar (an acronym standing for Outstanding Superior Kitchen All-Rounder, an ''all-rounder'' being a person who plays all positions on a rugby team). It was half the size of the standard Cuisinart and sold for as little as $60. When he got a look at it, Sontheimer sneered and decided it was just a gimmick.

The first year, Oskar sold 750,000 units, as many as Sunbeam could manufacture. The next year, sales soared to 1.4 million.

It would have been sensible for Cuisinarts to develop its own small machine, but Sontheimer chose not to. ''When someone spits in youir face, you don't say it's raining outside,'' Finesman says. Not until several years later was a compact Cuisinart introduced, too late to blossom into a big success.

By the middle-1980's, the days of breakneck growth for the food-processor market had ceased and it began to shrink. Many people who wanted the devices had them; fancy cooking was less voguish. Cuisinarts' sales began to erode, and its profit margins were further compressed by the fact that the company's chief sources of supply were Japan and Hong Kong, and the dollar had sunk in relation to the yen. What's more, a protracted problem began to catch up to the company: the failure to mine the prestigious Cuisinart name.

An error has occurred. Please try again later.

You are already subscribed to this email.

Perhaps the best thing about a potent brand name is you can plaster it on all manner of supplemental products and then count the money. Cuisinarts did introduce a bread pan, a meat-yeast thermometer, a rolling pin, but little else. From early on the company had examined hordes of products, but never gotten them out the door. Former executives blame Sontheimer's fussiness. He didn't want to bring out just a good toaster. It had to practically fly.

Several years ago, Sontheimer was quoted by a Forbes magazine reporter as saying: ''We could put pebbles in a can, and if we put the Cuisinart name on it, it would sell. But after that, the name would be absolutely worthless. If we don't feel we can make a better product, we don't enter the market.''

Besides Sontheimer's perfectionism, he also had a decided lack of capitalistic vision. Cooking was his obsession. In the words of one associate: ''Carl could be in a meeting where one person was going to jump out the window because of something going sour in his life, the Premier of Russia and the President were waiting to see him and someone else had arrived to show him a new recipe. The guy with the recipe is the person he would talk to.''

In the early part of 1987, getting up in years and strained by the decline of his company, Sontheimer agreed to sell Cuisinarts. The buyer - for $45 million - was to be a group headed by Dick Tarlow, a friend who ran Tarlow Advertising and handled Cuisinarts' advertising. Tarlow landed the account by a quirk. Sixty-two agencies competed for it, and when it was Tarlow's turn to perform, Sontheimer asked him one question, ''Dick Tarlow, if you could do anything with your life, what would it be.'' Years before, Tarlow had been a baseball pitcher, with enough talent that a dozen professional teams dangled contracts. He turned them all down because he found watching baseball boring and didn't want to have to sit on the bench during days he wasn't on the mound. He glanced at Sontheimer and said, ''I wish I were in baseball.'' Sontheimer gave him the account because he said that was the only interesting response he had heard.

The night before Tarlow was to close on the deal, he got cold feet and told Sontheimer he was backing out. As he explained his change of heart recently: ''What scared me was we were paying a lot of money and we wouldn't have enough capital in the company to expand it.''

Other bidders, however, stepped forth, and Sontheimer sold Cuisinarts for $42 million, the bulk of it borrowed from the Bank of Boston, to a group of investors led by George Barnes, Robert Fomon and the Washington National Investment Corporation. People in the industry felt the price was far too steep. Also, the deal was a leveraged buyout, the prevalent financial phenomenon of the 1980's, in which much of the purchase price is borrowed and secured by assets of the company. By conventional wisdom, Cuisinarts was hardly an apt candidate for a leveraged buyout. Usually, such deals are done with growing companies with marketable assets that can be sold to pay down some of the awesome debt. Cuisinarts' sales had fallen for five consecutive years and it didn't have assets to sell. It needed an infusion of money to steer the company into new products. Several well-informed people proclaimed the deal to be ridiculously ill conceived.

The acquisition was completed in January 1988. George Barnes arrived at the Stamford headquarters and was installed as Cuisinarts' new chief executive.

AT THIS POINT, THE company had been losing money for several years. Matters, however, became considerably more precarious under the new regime. They did not enter the picture with the best of reputations. Bob Fomon, an intense, imperious man, presided over E. F. Hutton for 16 years, during which time the company slipped badly and, in 1985, was engulfed by scandal when it pleaded guilty to 2,000 felony counts for illegal bank overdrafting. Fomon steadfastly refused to relinquish power at the company until at the end of 1986 the board booted him out as chief executive. George Barnes is a stocky man with thinining gray hair and a knack for promoting himself. His peripatetic past is littered with troubled businesses. After stints at Waring Products, Westbend, Gillette and Schick, he founded the National Appliance Company in 1979. It went into liquidation in 1982.

Because of its heavy debt, Cuisinarts sorely needed higher sales. To accomplish that, Barnes embarked on what one observer termed ''panic salesmanship.'' Ignoring the fact that the Cuisinart was an upscale product whose customers shopped in higher-priced department and specialty stores, the places where the device had primarily been sold, Barnes approached major deep discounters such as Caldor, Target Stores and Price Club and sold them big orders. He put them in different boxes and made other small cosmetic changes to make it seem that the discount stores were getting a different model from the department stores.

The tack quickly foundered. Fewer Caldor shoppers than had been anticipated bought Cuisinarts. Compounding matters, many of the stores that had been loyal Cuisinart customers were enraged by the move.

Dick Silk, a Cuisinart representative who sells the machine in the Southwest, says the new strategy ''killed us.''

''Our orders dropped substantially,'' he says. ''There was a loss of credibility. The Cuisinart name meant quality and all of a sudden that changed overnight. And that had a very adverse effect on the specialty stores and department stores that had built the business. And so the Cuisinart went from the front aisle to the back aisle.''

Meanwhile, management failed to deal with the fact that its machines were coming over from Japan and Hong Kong, and its cookware from France, at a cost significantly higher than could be gotten in places like Taiwan or Korea. Yet no new supplier arrangements were struck.

Strapped for money, the owners were also unable to take the most important step: exploiting the Cuisinart name. Though Barnes planned to bring out can openers and slow cookers, the funds weren't there to market them. Undoubtedly, the owners didn't sense how much the market for processors had contracted. Nineteen eighty-six proved to be the peak year, when sales hit six million units. Last year, they sagged to half that, and makers anticipate a similar performance this year. Cuisinarts Inc., which had peak sales of some $70 million a year in the early 1980's, watched its revenues slump to around $56 million in 1988. Now that an estimated 43 percent of homes have a food processor, the product has become mature, and the arrival in 1987 of a tiny new device - the chopper/grinder - has also pinched sales.

As is so often characteristic in takeovers, personal pride began to play a part in the unraveling of Cuisinarts. More money was necessary, and increasingly it seemed clear that the only way to get it was to sell some equity in the company. But the owners clung to their dreams. ''People in these deals usually can't handle the reality when things go sour,'' noted a businessman familiar with mergers and acquisitions. ''They want to hold on to it and thrash it while there's still life left in it.''

GEORGE BARNES'S stay at Cuisinarts was stormy and brief. As the company failed to achieve the monthly sales targets set by the principal investors, the board began to lose faith in Barnes. Last April, he was dismissed. Replacing him was Donald Luke, a docile, well-groomed man who had been president of Actmedia, a marketing and advertising company. Barnes is quick to exempt himself from any blame. He maintains that his strategy was clicking but that too much had been paid for the company. He says that he exhorted the board to recapitalize the company but that it refused. When Barnes is pointing fingers, he likes to aim at Luke. ''Luke probably set a North American record for running a company into bankruptcy,'' he says. ''He didn't know what the hell he was doing.'' Luke refused to comment on Barnes's remarks. Once he settled in, Luke de-emphasized the policy of selling to mass discounters. He trimmed the work force to 100 people from 150, and readied two new housewares products for introduction. Few forward steps could be taken, because there was just too much bleeding. It became clear that the company's only hope was to find a new partner who could provide the money necessary to expand. Consequently, Cuisinarts filed for bankruptcy, listing assets of $34.5 million and liabilities of $43.2 million, and was put on the auction block. ''We're trying to save every buck that we can,'' Luke said near the end of last year. Soon afterward, Luke left Cuisinarts to become chief executive of the Senior Service Corporation, which supplies services to people over 50.

At first, more than 60 potential buyers expressed interest in Cuisinarts, but, within weeks, the list shrank to about two dozen. Among those said to be in the hunt were Farberware, Proctor-Silex, Dansk International, Conair, Hamilton Beach and Toastmaster. Dansk, as it happens, recently bought an electrical products concern run by Al Finesman. If Dansk bought Cuisinarts, Finesman expected to take command. Oddly enough, George Barnes even tried to put together investors to mount a bid to once again buy the company. He isn't ruffled much by the fact that he is often portrayed as the heavy.

''Yeah, I understand that,'' he said. ''They've got to put the blame somewhere. Like every other industry, this one is full of gossip and innuendo.''

At the end of December, Conair came out on top when it agreed to acquire most of Cuisinarts' assets for $17.1 million, less than half of what the Barnes group had paid. Lee Rizzuto, Conair's chairman, who founded the company in 1959 with his parents with a paltry $100, vows to exploit the Cuisinart name with a blizzard of products, including a coffee maker, a juicer and Cuisinart coffee beans. He hopes to pump up interest by winning endorsements from celebrated chefs. He says he thinks he can boost the company's sales, which dwindled to some $40 million last year, to $100 million within two years.

Carl Sontheimer, now in his mid-70's, and his wife continue to live in Greenwich, and no doubt are eagerly watching as the next act of the Cuisinarts saga unfolds. Those who know him say he is bitterly disappointed over what has come of his company.

Clearly Conair faces a problematic task. As Dick Silk says, ''You need to pull a rabbit out of a hat.''

A version of this article appears in print on April 15, 1990, on Page 6006046 of the National edition with the headline: How Cuisinart Lost Its Edge. Today's Paper|Subscribe